August 10 (Reuters) – Tesla Inc (TSLA.O) Chief Executive Elon Musk has sold $6.9 billion in shares in the electric car maker, saying the proceeds could be used to fund a potential Twitter deal if he loses a legal battle with the social media platform.
“In the (hopefully unlikely) event that Twitter forces this deal to close *and some equity partners fail, it’s important to avoid an immediate selloff of Tesla stock,” he said.
Shares of the microblogging site rose 3.5% to $44.35 in premarket trading, but were still trading significantly below Musk’s offer of $54.20 per share. Tesla shares rose 1.6% to $863.1.
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Musk broke the deal he signed on April 25 to buy Twitter for $44 billion in early July. Twitter has filed a lawsuit to force Musk to complete the deal, dismissing claims it was misled about the number of spam accounts on the social media platform as buyer’s remorse after the tech stock plunged. Both sides will appear in court in October. 17.
After the stock sale announcement on Tuesday, Musk took to Twitter and said “yes” when asked if he was done selling his Tesla stock, adding that he would buy it back if the Twitter deal didn’t close.
Eliminating the risk of a “fire sale,” the fact that Musk already has cash in hand if Twitter decides against him, and the comment that he will buy back stock if the Twitter deal is scrapped make it a positive position for Tesla. “said Mark Taylor, a sell-side trader at Mirabaud Securities.
Tesla did not immediately respond to Reuters’ request for comment.
The stock sale came shortly after Musk said at the company’s annual general meeting that Tesla was a “buying opportunity.”
“Elon selling (Tesla shares) over the past three days (Twitter) makes the deal significantly more likely to go through, even if it’s priced slightly below $50-$51 per share,” said Gary Black, managing partner at Future Fund LLC. tweet.
Musk, the world’s richest man, sold $8.5 billion worth of Tesla stock in April and said at the time that no further sales were planned. But since then, legal experts have suggested that Musk will sell more of his Tesla stock if he is forced to complete the purchase or settle the dispute with a stiff penalty.
Musk sold about 7.92 million shares between Aug. 5 and Aug. 9, according to Reuters estimates, and now owns less than 15% of the automaker.
The latest sales bring Musk’s total sales of Tesla stock to nearly $32 billion in less than a year.
Tesla shares rose nearly 15% after the automaker reported better-than-expected earnings on July 20, helped by the Biden administration’s climate bill that, if passed, would lift a cap on tax credits for electric cars.
Musk also said Tuesday that he may launch his own social media platform. When asked by a Twitter user if he would consider starting his own platform if the deal doesn’t close, he replied: “X.com.”
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Reporting by Hyunjoo Jin and Akriti Sharma in San Francisco, Medha Singh and Sruthi Shankar in Bangalore; Additional reporting by Shubham Kalia and Shivam Patel; Edited by Edwina Gibbs and Anil D’Silva
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